Interaction with management suggests shortfall in transaction revenue due to lower RECs would be partly offset by withdrawal of incentives on REC by IEX (link) \u2014 with effective transaction margin now at Rs 20\/REC on both purchase & sale (vs. Rs 16\/REC charged by only seller). We expect Q3 to remain flat on lower base of RECs, ESCerts^ (8% vs. 36% YoY); however, IEX\u2019 9Mperformance to remain healthy with14% rise in topline (Rs 2 bn), EBITDA margin of 82% and 22% rise in PAT (Rs 1.2 bn); reiterate BUY. ALSO READ:\u00a0Budget 2019: Where does government spend its money? Here is all you need to know IEX\u2019 DAM volume grew 19% in 9M on higher demand by discoms (80% share). With rising variation in base and peak, discoms are sourcing peak load from short term market (to save on capacity charges during off-peak) and base load from PPAs\u2013 to boost ST market; IEX to be key beneficiary. During April-Oct\u201918, while total generation rose 5% YoY, ST volume grew 19% with share of ST rising to 12.4% (vs. 11% YoY). Within ST, exchanges dominated with 39% share (37% YoY), traders at 33% (vs. 30% YoY) while deviation market share declined from 20% to 16%. Linking DSM price to exchange price under new amendment to gradually shift 50% of DSM vol. (due to non-technical errors) to exchanges as discoms will no longer have the benefit of lower pricing in DSM \u2014 this would drive 25% higher volume on exchanges. While Q3 to remain flat owing to high base effect, we expect 9M performance to remain healthy with 14%\/22% rise in topline\/PAT respectively; maintain BUY with TP of Rs 198. ALSO READ:\u00a0GST Council meet: Relief for small businesses as exemption limit doubled; key things to know During April-Oct\u201918, ST market grew 19% YoY vs. total generation\/long-term market growth of 5%\/3% with share of ST rising to 12.5%. We expect ST share to rise to 14% by FY22 led by structural shifts such as discoms sourcing peak load from spot, strong growth in renewables, improvement in transmission etc \u2014 IEX to be key beneficiary of the changing landscape of ST trade. Discoms constitute 80% of IEX\u2019 volume. Revival of industrial demand coupled with rural, household electrification will further drive power demand \u2014 peak demand grew 9% in YTDFY19.